Energy

Outrageous Opportunities in Upstream MLPs

Cato - You are wrong on all three counts and keep proving you really don't understand this stuff. Sorry to be pajorative...trully not the intention.

First PV-10 prices are NOT lower than current hedged prices. Where did you get that information? Have you looked at hedging lately? The curve is in backwardation and no dealer will make a market at those prices.

Second, 10% is a generous rate? Are you kidding me ? The typical oil & gas company can not earn a return greater than 12-15% IRR (which I am certain none of you will not believe and that is a good thing for me), so how can 10% be acceptable? I am sure you been one of the poor saps on the other side of my hedge fund's trades and am glad you are out there for my liquidity.

Third, the debt markets aren't open. Those acquistions you cite were done on bank revolvers and can not be termed out in the debt market...pick up a copy of the WSJ one of these days.

For full disclosure - I am currently short only a few of upstream MLPS at this time...been have been mostly short the refiners and long corn, soy, and silver. Cheers and hope this info has helped somebody.

Outrageous Opportunities in Upstream MLPs

There are so many problems with this article...I don't even know where to begin...and is sadly becoming the norm for Seeking Alpha.

If Mr. Heycke really thinks anyone in their right mind would buy a E&P company at PV-10 shows an extreme lack of understanding of basic oil & gas analysis, which he further compounds by forgetting the simple fact that non-cash FAS 133 hedge accounting is not including in DCF making it completely irrelevant.

At least the author was correct about the PIPE issue, because that is one of the issues. In addition the markets overriding concern that E&P MLPs not having adequate access to either equity or debt markets to fund development drilling on a go forward basis...but that is not worth mentioning...right?